Tag Archives: appraisal

Appraisals 101: What’s in an Appraisal

An appraisal is a dense multi-paged, document; usually on a form acceptable to Freddie Mac or Fannie Mae (their endorsement(s) are on the bottom of the page.) The appraisal is around 13 legal size pages, but the last five pages are boilerplate in which the appraiser certifies his methods, and outlines the limiting conditions of the appraisal. Only the first two pages of an appraisal contain really relevant information although subsequent pages have pictures and maps that augment the text.

The first section of the appraisal identifies the “Subject” both actually and legally: street address, lot or plot, section, subdivision, type (Fee Simple, condo, PUD), and other identifying information such as census tract, and map reference. The appraiser also gives the most recent property tax amount and any special assessments levied by the town or the parish. If a purchase rather than a refinance is involved, there are also a few details of the pending sale.

Section two describes the neighborhood, its boundaries, and general amenities and does the same for the municipality or parish. This is a free-style description and the appraiser may note local economic factors such as major employers, describe the climate, or local attractions such as beaches, state parks, or recreation opportunities. Appraisers probably recycle this prose every time they produce a report in a given area.

Section four contains a description of the site – lot size, topography, shape, landscaping, availability of utilities and amenities such as street lights, paved streets, sidewalks, whether the property is located in a flood zone, and any apparent easements. An appraiser should not be expected to examine the title for easements – he is only reporting on apparent ones such as indicated by light poles or telephone equipment on the property, nor should an appraisal be relied on for flood zone status.

Next are home improvements – that is the house itself. The subject house in our example is described as a 1 unit, 1 story, detached single-family ranch, 38 years old with an effective age of (i.e. has been maintained so as to appear) 20 years old. The house has a slab foundation, brick and vinyl exterior, a composite shingle roof, no basement. The appraiser noted no dampness, unusual settlement, or pest infestation. The form is set up so as to list the rooms and the total square footage on each level of a house – basement, level 1, and level 2, etc. Since this is a one story home, the appraiser noted a living and dining room, three bedrooms, two baths, and a kitchen, a total of 1845 sq. ft on level 1. Porches, patios, garages, or any outbuildings are not relevant to this section.

The appraiser is expected to note such interior features as floor coverings, walls (sheetrock, paneling, plaster), bathroom walls and floors (vinyl, ceramic tile), doors (solid or hollow core?), heating and air conditioning (existence and fuel source), kitchen appliances, insulation, existence of and access to an attic, car storage (attached, detached, garage, carport?) and amenities such as fences, porches, swimming pool, deck, and fireplaces, and to evaluate their appearance or condition. The words “average” and “typical” are appraisers’ best friends. Do not expect anything creative or lyrical here.

In the final section of Page 1, the appraiser describes “additional features,” notes the condition of the improvements and any adverse environmental conditions such as hazardous waste.

If you would like a referral for an appraiser in your area give us a call at 225-368-3237 or email us at sold@artofhomeselling.com.

Appraisals 101 – BPOs, Broker’s Price Opinions

A BPO or broker’s price opinion is commissioned by a bank (often because of a pending foreclosure) or an attorney handling a divorce or an estate. These are used in situations where the agent may be unable to access the interior of the house and must rely on a drive-by and information on comparable home sales from the public record. In presenting both CMAs and BPOs, agents are using their experience and instinct rather than any formal training in valuing property.

Appraisers, on the other hand, are formally trained and either licensed or certified by their state. Most will certify that they prepared their work in conformity with the requirements of the Code of Professional Appraisal Practice of the Appraisal Institute.

Appraisals 101 – CMAs, Comparative Market Analysis

Appraisals are often confused with two other types of less formal home evaluations, CMAs and BPOs. When an owner prepares to sell a home he usually requests a Comparative Market Analysis (CMA) from one or more real estate agents. Agents look at comparable homes in the neighborhood that are on the market or have recently sold and use these “comps” to come up with a suggested listing price. There are no rules for CMAs and every agent has her own approach. Some are verbal, straight out of the agent’s mental data bank; others are quite elaborate, with information on a number of properties, pictures and detailed descriptions based on the agent’s actual inspection of the properties while they were on the market. A CMA is a background to or justification of a suggested price and is, in no way, an appraisal. Sometimes an agent will even “cherry pick” comps to back up her predetermined listing price.

If you would like a CMA for you home give us a call at 225-368-3237 or send us an email at sold@artofhomeselling.com by clicking here.

Appraisal 101 – 4 Part Series on Appraisals and What is Inside Them

Appraisal is probably a word that was brought up when you were buying your home or refinancing. You dug into your pocket and paid $300 or $400 but you probably have never seen your home appraisal. You paid for it, you own it, you have a right to a copy of your home appraisal, but to get a copy, a homeowner usually must request it from the mortgage company – in writing. Between the goings on of day to day life, someone is not likely to place a written appraisal request high on their priority list.

Most homeowners really don’t care about the appraisal. As long as the conclusion was the house was worth enough to justify the mortgage, homeowners are happy and, by the time the ink is dry on the closing documents, have forgotten they were ever required to spend the money.

Still, an appraisal is interesting and, in the future, might help you track your home appreciation in light of other sales in your neighborhood. Make the effort, you can probably request a copy by email, read it, then save it for future reference.

In the next week we will cover the basics of appraisals such as what goes into a Comparative Market Analysis (CMA), what is a Broker’s Price Opinion (BPO), and how an appraiser estimates your home’s value. Stay tuned! And for more information on appraisals or to get a referral for an appraiser in your area give us a call at 225-368-3237